Back Matter

Back Matter

International Monetary Fund
Published Date:
January 1988
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World Economic and Financial Surveys

April 1986World Economic Outlook: A Survey by the Staff of the International Monetary Fund.
May 1986Primary Commodities: Market Developments and Outlook, by the Commodities Division of the Research Department.
July 1986Staff Studies for the World Economic Outlook, by the Research Department of the International Monetary Fund.
July 1986Export Credits: Developments and Prospects, by Eduard Brau, K. Burke Dillon, Chanpen Puckahtikom, and Miranda Xafa.
October 1986World Economic Outlook: Revised Projections, by the Staff of the International Monetary Fund.
December 1986International Capital Markets: Developments and Prospects, by Maxwell Watson, Russell Kincaid, Caroline Atkinson, Eliot Kalter, and David Folkerts-Landau.
February 1987Recent Experience with Multilateral Official Debt Rescheduling, by K. Burke Dillon and Gumersindo Oliveros.
April 1987World Economic Outlook: A Survey by the Staff of the International Monetary Fund.
May 1987Primary Commodities: Market Developments and Outlook, by the Commodities Division of the Research Department.
August 1987Staff Studies for the World Economic Outlook, by the Research Department of the International Monetary Fund.
October 1987World Economic Outlook: Revised Projections, by the Staff of the International Monetary Fund.
January 1988International Capital Markets: Developments and Prospects, by Maxwell Watson, Donald Mathieson, Russell Kincaid, David Folkerts-Landau, Klaus Regling, and Caroline Atkinson.
February 1988Officially Supported Export Credits: Developments and Prospects, by K. Burke Dillon and Luis Duran-Downing, with Miranda Xafa.

The institutional arrangements for providing official export credit support differ widely from country to country. The export credit agency itself can be a department within a ministry, an independent governmental agency, or even a private firm operating under instruction from, and for the account of, the government. Of the cases studied here, the Federal Republic of Germany and the Netherlands conduct their export credit insurance programs through private companies (Hermes and NCM). In most cases, agency activity is subject to ministerial, and usually interministerial, guidance and review. Throughout this paper, the convention is adopted of referring to the activities, policy stance, and financial position of the agency. It should be understood that the agencies have varying degrees of independence in these matters and that, where the agency is a private firm, the reference is exclusively to its government-mandated business. The term “governmental authorities” is used to refer to the ministry or ministries under whose guidance the agency operates or that are represented on its Board of Directors.

“Medium term,” as used in this paper, refers to all commitments other than short term.

In each Paris Club Agreed Minute a cutoff date is established, and loans contracted after that date are not subject to the rescheduling. During a series of reschedulings, the original cutoff date can be maintained, thus protecting new credits, or the cutoff date can be advanced, thus subjecting new credits to rescheduling.

The discussion here is couched largely in terms of policies on guarantees and insurance, that is, “cover” policies, and the associated policy instruments. For those agencies that also provide direct export credits (see “Instruments of Export Credit Cover Policy,” below), the stance on direct credits is generally in line with that on cover, although the instrumentation may differ.

The present study does not encompass the activities of either the Canadian Wheat Board or the United States Commodity Credit Corporation. Credits granted by the latter are, however, included in the BIS/OECD statistics on officially supported export credits.

In addition, in Germany and the Netherlands all officially supported export credit cover is effectively provided under government direction and for government account.

The prior premium schedule did not differentiate by country, and included all private borrowers in one category. Under the new schedule, exposure fees will be based on three factors: the risk category of the country; the class of buyer (sovereign borrowers or guarantors; parastatals, banks; and highly creditworthy private firms, and all other borrowers); and the term of the transaction.

Discounts of 25 percent can apply for countries in the lowest risk category, while surcharges of 10 percent have been introduced for certain countries included in the highest risk category.

The term “commitments” refers to agencies’ outstanding credits and guarantees/insurance, including both principal and interest and regardless of whether the goods have yet been shipped or received, plus contingent obligations to provide such credits or cover.

While the OECD data are published jointly with data provided by the Bank for International Settlements in the series “Statistics on External Indebtedness: Bank and Trade-Related Nonbank External Claims on Individual Borrowing Countries and Territories,” the OECD is solely responsible for the export credit data in that series.

In addition to the efforts being made by the OECD and the Berne Union, the International Compilers’ Working Group on External Debt Statistics—with the participation of the BIS, the OECD, the Berne Union, the Fund, and the World Bank—has continued its work on the construction of a framework for external debt statistics and the resolution of methodological and technical issues.

Actually, most agencies’ policies specify that in making the claims payment they will use the rate specified in the contract or the current exchange rate, whichever gives the smaller claims payment. Therefore, in practice, agencies are carrying on their books their maximum possible exposure.

As noted in Section II, a number of other agencies have recently begun to issue policies denominated in foreign currency, but the amounts issued under such policies to date are small.

The Berne Union series used in this report includes outstanding short- and medium-term commitments and unrecovered claims.

Appendix III outlines the main provisions of the Consensus Arrangement and recent changes that might tend to reduce further the subsidy element in officially supported credits.

It should be noted that when agencies refinance, rather than reschedule, they generally do not report a claims payment. Furthermore, if a claim had been paid before the restructuring was agreed, the agency would record a recovery at the time the refinancing loan was made. In the discussion here, the staff attempts to abstract from this complication in reporting practices and treat these cases as if the more standard practice were employed.

At least one major agency bears directly the cost of interest rate subsidies, and this has been an important factor in the deterioration of that agency’s financial position.

While the discussion here focuses on the selection of investment projects, officially supported military credits have also contributed importantly to some debt-servicing problems.

In the event, creditors considered that these conditions were not met, and the 1987 tranche of the rescheduling did not take effect.

The unadjusted stock reported in U.S. dollars in the BIS/OECD series also declined in 1985, despite the fact that the currency of China’s major creditor appreciated sharply against the U.S. dollar.

Some of the agencies that posted an open cover policy had in effect reached their commitment or exposure ceilings and were not adjusting them upward.

However, one of the agencies said that it would have adopted a more open cover policy following the 1986 Paris Club agreement if the cutoff date applying to the 1983 rescheduling of private sector debt had been applied to public debt as well. That creditor had made substantial disbursements to the Mexican public sector since 1983 on the understanding that the same cutoff date would be agreed in any subsequent reschedulings.

The only exception is EID/MITI, which reports U.S. dollar export credits on an underlying loan basis. The BIS/OECD and Berne Union treat these credits in the same way as numbers reported on a commitment currency basis, and the staff has done likewise in its exchange rate adjustment.

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